Leaders must understand the constitutional bargain, and governments' obligations under it. Chris Eichbaum argues Christopher Luxon could do with a dose of John McCain-style leadership and integrity.
Opinion: I admit it. I tend not to listen to Newstalk ZB. In large part that is because I am a creature of habit. At a point in my past Morning Report became part of my morning ritual. The dial very rarely moves.
But a recent tweet alerted me to an interview on the aforementioned Newstalk, of Christopher Luxon, and by Mike Hosking. I use the word ‘interview’ advisedly because at times it was more evocative of the kind of exchanges I was party to in rugby changing rooms prior to the team going out to engage our opponents of the day. Depending on the coach, captain and the opponent the tone could range between, ‘Let's play hard and fair’ to ‘Take no prisoners …’ Or something like that.
The ’interview’ between Hosking and Luxon had something of this quality about it – a ‘You need to harden up and do what’s necessary' quality. But the part that stood out to me was the relative passivity of Luxon and the unbridled degree of exhortation on the part of the interviewer.
When pushed, Luxon would agree that a certain course of action may well be necessary. Repeatedly, Luxon’s course of action appeared not to satisfy the interviewer, who proceeded in a serial manner to up the ante by means of suggested courses of action that became more and more extreme – ‘but what about...?’, ‘then why not...?’. It evoked earlier exchanges in the election campaign where Luxon’s response to extreme observations regarding matters to do with the use of te reo or other aspects of relationships between Māori and Pākehā was not to push back – even gently – but to respond by saying that the ‘problem’ would be 'fixed’ by electing him and his party (and as we now know his coalition or support partners) to office.
What is missing for me in this is a necessary quality in any aspirant for higher-office values-based leadership. Pushing back against views that are – at their core – inconsistent with the kinds of values we assume informs a political party that brings liberal and conservative (legitimate and tested) elements of a worldview to play. But what I heard was not leadership. It was satisficing.
Some may recall images of the late Senator John McCain being confronted by a voter in an election rally when he ran against Barack Obama in 2008. Handed the microphone, a voter told McCain that she did not trust Obama and called him an ‘Arab’. McCain replied: "No, ma'am. He's a decent family man, citizen that I just happen to have disagreements with on fundamental issues, and that's what this campaign's all about”. Now that’s leadership. It’s not what I have heard coming from Luxon.
To specifics. The ‘triggering’ issue in the Hosking interview was the performance of the Governor of the Reserve Bank, Adrian Orr. Luxon (and we can assume others in his party) are not well pleased that Orr was reappointed to a further term on the recommendation, in effect “twice over’’ by the Reserve Bank Board – one outgoing board and one incoming (full disclosure, I was a member of the outgoing board).
Orr is a complex character – one might venture the observation that this comes with the territory. But Luxon clearly wanted an interim appointment that aligned with the electoral cycle and that allowed an incoming minister to make, one presumes, a new appointment. And this is where the frustration levels with Luxon become elevated.
He is not a fool. He should understand the essence of the theoretical arguments around central bank independence, and why the appointments of those who lead central banks need to be insulated from political considerations – all the more so those of a short-term nature. He should at the very least have a rudimentary understanding of the Reserve Bank Act. But if he does possess these, he denied them, and his responsibility to provide thought and political leadership.
And, moreover, he appeared to tie Orr’s continued tenure to a commitment to undertake a review of the conduct of monetary policy during, and coming out of, the pandemic under Orr (notwithstanding that the Reserve Bank has already done this, and with independent assessments – see In retrospect: Monetary policy in New Zealand 2017 to 2022 - Reserve Bank of New Zealand - Te Pūtea Matua). To be clear, aspects of the bank's (and more to the point the Monetary Policy Committee’s) conduct of monetary policy has been questioned, as too has the bank board’s discharge of its oversight role.
But Luxon should know that, since the establishment of the Monetary Policy Committee, the Treasury has had observer status on the committee (and I am advised that has extended to active participation) and at no point was the responsible minister alerted to any concerns. He should know this. Perhaps he does but remains silent. Moreover, under the new ‘Crown Entity’ governance model, the Treasury acts as a monitoring and purchase adviser to the Minister on the Bank.
Some see a conspiracy of silence, others plenty of hindsight and little acknowledgement of policymaking under conditions of acute uncertainty. To my knowledge, no concerns have been raised by the Treasury. And then, of course there is the red herring (there is a temptation to refer to this as ‘red meat’) around the bank’s dual mandate that we are told will be a casualty of the National Party-led incoming government's first 100-day programme. Absent that dial mandate, the bank has made it clear there would have been no difference in its conduct of monetary policy. There were no trade-offs. One awaits with interest, and for my part – should it eventuate, real concern – the prospect of the removal of the only formally mandated statutory commitment in New Zealand legislation to maximum sustainable employment.
And finally, but not least, we move out to the public service generally, noting that the Reserve Bank is, while part of the wider state sector, not a public service agency as such. However, like public service agencies it does operate, much to the discomfort of Orr at times, with a social licence. Luxon wants performance, fine. He wants efficiencies, okay to an extent, but if you cut into capacity too deeply you compromise capability. He wants metrics like KPIs so typical of private sector organisations. Giving him the benefit of the doubt let’s assume he is aware of the voluminous literature in the business management press that questions their efficacy and effectiveness in a world where stakeholders exist alongside shareholders. But I do sense a concern that maintaining metrics for the sake of it can lead to goal (read ‘outcome’) displacement. And I thought that outcomes (or results) were what it was all supposed to be about. And once again, I do wonder whether Luxon has been briefed on the Public Service Act 2020, and equally importantly understands how governance these days is as much about what happens in networks of collaboration involving government and civil society as what Cabinet minutes say. The Wilsonian notion of politicians actively proposing, and administrators supinely deposing, is dead.
Finally, it really concerns me – and this is where having a good look at the Public Service Act (and the Cabinet Manual) would be more than prudent – that Luxon fails to understand that in Aotearoa/New Zealand we have a Constitutional Public Service. It has the capacity to respond to the policy preferences of the government of the day: responsive competence. And it has the capacity to discharge its constitutional responsibilities that come with principles (Section 12), and with values (Section 16) – things like political neutrality, provision of free and frank advice, open government, stewardship, and the values commitment to be impartial, accountable, trustworthy, respectful, and yes, to close the loop, responsive. So responsible competence.
Former Australian Treasury Secretary Ken Henry gathered his staff together in Canberra before the 2007 Federal Election and suggested that the optimal in terms of principles and values was the ‘sweet spot’ between responsibility and responsiveness. You can have too much, and too little of both. But what you need above all else is the capacity to tell the government what it needs to hear as well as what it may not want to hear, to respect the popular mandate and assist the government of the day. And the government of the day has to actively facilitate this and welcome it.
You need to be able to have difficult, but respectful conversations. You need a government that understands the constitutional bargain, and its obligations under it. Luxon could do worse than to read the Henry speech and share it with his colleagues. The risk is that the bargain is discarded, that attempts are made to politicise the public service, that political allegiances trump merit in public service appointments, and that a settlement that has endured since 1916 and the first Public Service Act is repudiated. All it takes is a dose of McCain-styled leadership and integrity. "Sorry Mike, I disagree”.
Chris Eichbaum is a former public servant (Canberra and Wellington) and a former prime ministerial office adviser and ministerial adviser to a number of Labour governments. He served two terms on the Board of the Reserve Bank of New Zealand.
